Saving & Investing
Investment Return (ROI & CAGR)
Measure what an investment actually returned: the total gain, the return on investment as a percentage, and the compound annual growth rate that makes holdings of different lengths comparable.
Compound annual growth rate
9.95%
Total return 76.67% over 6 years
- Total gain
- $11,500
- Return on investment
- 76.67%
- Ending value incl. income
- $26,500
- Years to double at this rate
- 7.2
Rule of 72 approximation
Past performance does not predict future returns. Use CAGR to compare what happened, not to project what will happen.
ROI, CAGR and why both matter
Total return is the ending value plus any income received, minus what you invested. As a percentage of the amount invested, that is your ROI. It answers "how much did I make?" but says nothing about how long it took.
CAGR fixes that: it is (ending ÷ starting)^(1 ÷ years) − 1. A 60% gain over three years is an excellent 17% a year; the same 60% over twelve years is a modest 4% a year. When comparing funds, properties or business projects, compare CAGR.
CAGR is a smoothed average, not a description of the path. A holding that fell 40% and then tripled can share a CAGR with a steady grinder, while feeling nothing alike. It also ignores taxes, trading costs and contributions made along the way.
Frequently asked questions
What is the difference between ROI and CAGR?
ROI is the total percentage gain over the whole period, ignoring time. CAGR is the smoothed annual rate that would turn the starting value into the ending value over that many years, so it lets you compare investments held for different lengths of time.
How are dividends or income handled?
Add them to the ending value if you reinvested them, or enter them in the income field to include them in total return.
Does this adjust for inflation?
No, the result is a nominal return. Subtract your inflation assumption from the CAGR to approximate the real return.
Can CAGR be negative?
Yes. If the ending value is below the starting value, the annualised rate is negative, which is the correct way to express a loss over multiple years.